For the last five or so years, we’ve been hearing a lot about Amazon’s plans to integrate ‘anticipatory shipping’ into its supply chain. But what exactly is anticipatory shipping, and how does it work?
First off, anticipatory shipping is not the same as Subscribe and Save, where Amazon customers can schedule a recurring delivery of their most commonly needed items. Anticipatory shipping requires no specific input from the customer.
It works like this. Amazon uses its immeasurably vast and constantly growing treasure trove of data to predict what customers are likely to order. Once the algorithms are confident enough in their prediction, the product is shipped to a distribution hub closer to the customer so that if they do order the product, it arrives more quickly. Built into this system is the risk of the algorithms being wrong, and the consequent wasted shipping costs. So far so good, and it makes perfect sense for items like printer cartridges, toothpaste and cat food – but what about fresh food?
Fresh food can’t just sit in the warehouse forever – even if it’s refrigerated – so when the algorithms get it wrong and people don’t order exactly as expected, Amazon is going to have to find a way to sell that fresh food before it starts to become not so fresh.
Enter Amazon’s pricing algorithms. Unlike its competitors, Amazon’s prices don’t just update a few times a day. They update, on average, every ten minutes. So when the algorithms get it wrong and you opt for chicken instead of beef, they’ll instantly start dropping the price on that tasty piece of eye fillet they were expecting you to order so that someone snaps it up and it doesn’t go to waste.
This is different to a traditional supermarket reducing the price of items that are nearing their use-by date in a few ways.
First, the algorithms will outperform any human department manager in pricing items for a quick sale, so less fresh food will be wasted.
Second, no Amazon staff member needs to walk around with a roll of ‘Priced reduced’ stickers.
Third, because the fresh food is available for sale the minute it arrives at the distribution centre, i.e. it doesn’t need to be unpacked off a delivery truck and repacked into a display bunk before customers are aware of its existence, Amazon has more time to sell a given item than a traditional supermarket.
What’s next?
We recently stumbled across a hilarious satirical article about Amazon’s next big move, “lifetime anticipatory shipping”. The way it works, writes the satirist with their tongue firmly in their cheek, is that Amazon will predict everything that customers could need for the entire rest of their lives and simply send it straight to them – after automatically debiting their bank account for the purchase. It’s a funny concept, but is it really so ridiculous?
Of course, sending customers everything they’re going to need for the rest of their lives is silly, but it’s not so hard to imagine a cross between this and Subscribe and Save.
After all there are plenty of subscription box retailers who send customers curated selections of the products they predict their customers will love. If the customer doesn’t love what’s been selected for them, they can generally send it back.
The difference between these subscription boxes and Subscribe and Save is that with the latter, customers know exactly what they’re getting. With subscription boxes, it’s often a lucky dip…except with food. With the majority of recipe box services, like HelloFresh, Marley Spoon and Gousto, customers select their recipes weekly, so they know exactly what they’re going to be cooking throughout the week.
Surprise me
Once Amazon enters the recipe box market – and you can bet it will – it will be able to combine anticipatory shipping with Subscribe and Save in a whole new way. With a few tweaks from the customer (e.g. allergies, foods they dislike, etc) Amazon could send weekly or bi-weekly food deliveries, further negating the need to go supermarket shopping. And the food could be a seasonally-based surprise that also takes Amazon’s stock levels into consideration, meaning delicious fresh food and lower costs for Amazon.
The logical next step would be for Amazon to start sending (and charging you for) other things it predicts you might need. For example, if your weekly Amazon box included all the ingredients for a sticky pork recipe, it might also include scourer pads (that you hadn’t specifically ordered). It could be a little frustrating being charged for something you didn’t order, but where is the line between convenience and choice? Customers would probably be quite quick to forgive the presumptuousness in light of the added convenience.
Once that starts happening, the idea of ‘lifetime anticipatory shipping’ will seem less like a dystopian nightmare and more like an inevitability.
Of course, there’s nothing stopping Amazon’s fresh-food competitors from using exactly the same method in their online offerings. In fact, supermarkets with an established fresh food delivery network are at an advantage as they already have the necessary infrastructure in place. But they just don’t have the same range as Amazon across other categories – which is why Amazon’s ongoing expansion into fresh food continues to be so alarming.